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If your company is in the business of selling products or services, a sales incentive structure can play an instrumental role in the business's success. Sales incentive plans give your sales force specific goals to work towards, and help ensure that you reward achievements that will assist the business in meeting its overall revenue goals.

Design

Document your sales incentive plan clearly so it reflects your business's sales strategy, performance measures, compensation and administration. To drive the kind of performance your business will need to meet or exceed its revenue targets, the plan must motivate your sales force to achieve the targets established. The less complex the sales incentive plan is, the better. Agents should have a clear understanding of the business's objectives and the level of contributions team members must make to ensure the company's success.

Compensation

While it may be tempting for the owner of a small to medium-sized business to hire sales agents on a commission-only basis, this may not be the best course of action for your business. A commission-only agent will be much more preoccupied with his bottom line rather than that of your company. When the going gets tough, commission-only agents can abandon your business, because if no deals are being closed an agent cannot provide for himself or his family. When an agent sees that you're willing to make an investment in him by paying a competitive base salary plus commission, you're likely to recruit a higher caliber of sales professional who will work diligently to give you the results you seek.

Performance Measurements

Performance measurements are a crucial piece of any sales incentive structure because they allow managers to see whether sales agents are performing up to expectations. Measurements will differ from business to business, but should be focused on measuring or assessing the activities performed by a sales agent that will lead to a sales outcome. For some companies, this means tracking the number of presentations a sales agent gives on a weekly or monthly basis. For others, it may mean reviewing the number and dollar value of closed sales. Whatever the measurement, it should be consistent, accurate and results-based.

Evaluation

Evaluating the effect your sales incentive plan has on your sales force's performance will be the clearest indication of what works and what doesn't. If no one on the sales team is meeting expectations, it's time to evaluate whether the goals are set to high. If everyone on the team is receiving bonuses despite the business being shy of its revenue goals, you'll need to revisit the individual or collective sales targets. You should evaluate your sales incentive structure periodically to see what changes, if any, need to be made. A well-executed sales incentive structure will receive praise from your sales force. The best sales incentive plans reward stellar performance and separate your superstar agents from those that are unproductive.

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About the Author

Oneil Williams started writing professionally in 1993. He wrote for "The Sunday Gleaner" and the "Jamaica Observer," two newspaper publications in Jamaica, and immigrated to the United States in 1995. Williams holds a Bachelor of Arts and a Master of Arts in communication from the University of Central Florida.